This is the arbitration of a grievance against contracting out. The Dispute and Joint Statement of Issue filed at the hearing are as follows:

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The material before the Arbitrator establishes that fibreglass repairs were performed in Thornton Yard in what may fairly be described as a garage-like wooden shed that was relatively makeshift in nature. Upon being advised that the facility did not comply with safety standards, following an inspection by federal officers of Labour Canada, the Company discontinued fiberglass repairs in the yard, dismantled the shed and contracted out the work in question. It does not appear disputed that the Company was under an order, which included a completion date of July 6, 1987 whereby a number of deficiencies, including ventilation, electrical panel access, storage of flammable material and the use of a gas heater in a hazardous location and failure of compliance with the national building code must all be remedied. The Company maintains that the erection of a building that would meet the above standards, while also providing for transportation systems, storage areas, safety and first aid equipment and a clean-up area for employees would cost in the order of $350,000 to $395,000. In the Company's view the relatively small volume of fibreglass repair work at Thornton Yard did not justify the expenditure involved. It further submits that the 1,150 hatch covers repaired yearly at Thornton Yard could not be accommodated in other Company facilities, and in particular that the Pointe St. Charles Shop was not equipped to handle the increased volume.

Appendix XVI of the collective agreement governs the right of the Company to contract out work. It provides that work normally performed by employees represented by the Brotherhood is not to be contracted out save in the case of certain specific exceptions. Among the exceptions listed are the following:

The Company submits that the circumstances at Thornton Yard fall within the two foregoing exceptions.

Bearing in mind that the burden in this matter is upon the Union, the Arbitrator has some difficulty rejecting the contention of the Company on the basis of the facts presented. The facts disclose that, in light of the order issued by the inspector from Labour Canada it was undeniable that the Corporation did not have the equipment or facilities necessary to it at Thornton Yard. While it appears that certain fibreglass repairs were performed by the Company at other locations, usually on a similar small scale basis, the unrebutted representation of the Company is that those facilities, at Transcona, St. John, Windsor, Thunder Bay, Melville and Calder Yard were all inadequate to handle the additional volume that would have been required to accommodate the work from Thornton Yard. It appears that those facilities were found to be equally unsafe and were discontinued by the Company as fibreglass repair shops.

The Brotherhood's representative asserts that either Pointe St. Charles or the Moncton Paint Shop could be utilized for fibreglass repairs. The Company's response, however, unrebutted by any evidence called by the Union is that the Pointe St. Charles facility does not have the capacity to do the work involved and that the Moncton Paint Shop does not meet the Labour Canada standards for fibreglass repairs, and could not be brought up to standard without substantial modification at considerable expense.

It is well established that the prohibition against contracting out does not require the Company to incur substantial capital expense to obtain or install entirely new equipment or facilities which are not available to it and which are essential to the performance of the work in question (see Shopcraft cases #103, 115). In the instant case it is clear that whether it established a new facility at Thornton Yard or substantially upgraded some other facility in Canada to perform the fibreglass repair work, the Company was faced with a circumstance where the capital expenditure involved was simply not justified by the volume of work that would be done. As the essential equipment was not available to it, I am persuaded that in the circumstances the exceptions described in paragraphs 3 and 4 of Appendix XVI of the collective agreement do apply, and that no violation of the collective agreement is disclosed.

For the foregoing reasons the grievance must be dismissed.